With opinion polls currently predicting a Labour Party victory at the next election, this blog reviews Labour’s Renters’ Charter. How does it differ from the current Rental Reform Bill, and what can landlords expect if Labour does come to power?
The latest opinion polls show a clear lead for Labour in the next general election, as 48% intend to vote red compared to just 26% for the Conservative party. Some property investors may be concerned about what another Labour government will mean for the property market. Labour released their ‘Renters’ Charter’, which Shadow Housing Secretary, Lisa Nandy, intends to implement within 100 days if Labour wins the next election.
Many landlords had reservations surrounding the Conservative Renters’ Reform Bill, but how does Labour’s Renters’ Charter compare?
What’s included in Labour’s Renters’ Charter?
The main announcement from the Renters’ Reform Bill that is cause for concern for the Private Rental Sector (PRS) is the abolishment of Section 21 evictions. Unfortunately, Labour also intends to scrap Section 21 “no-fault” evictions with no planned alternative measures. Some other similarities between the two bills include creating a national register for landlords, allowing tenants to keep pets, and enforcing the Decent Homes Standard to the PRS.
Some new pledges from Labour include:
- Reducing eviction powers for landlords who have tenants in arrears
- Introducing four-month notice periods
- Looking into a ‘portable’ deposits scheme to make it easier and cheaper for tenants to switch properties
- Allowing tenants to make “reasonable alterations to a property”
What these pledges mean for landlords
Out of these policies, reducing eviction powers and allowing tenants to alter a property will undoubtedly cause the most trouble for landlords. With Section 21 evictions already likely to be scrapped, further reduction to landlord control will drive many to leave the market altogether. Landlords, too, are dealing with increased interest rates and other costs, so removing the ability to evict tenants in arrears could cause severe financial difficulty to investors.
Similarly, just as with the Section 21 plans, this pledge would be harmful to renters. Landlords will be much more vigilant when choosing tenants, prioritising higher-earning individuals as opposed to those with less-impressive credit scores and lower salaries. It’s these vulnerable tenants who will suffer as a result of Labour’s plans.
The pledge to allow tenants to make “reasonable alterations to a property” could cost property investors a lot of money in the long term. Of course, the devil will be in the detail with this one to see just how much tenants will be permitted to change within a property; however, this could also of drive landlords out of the market. Leaving landlords to shoulder all redecoration costs at the end of a tenancy to bring a property back up to standard will become tiresome and expensive. Further details are needed to understand the extent of the plan.
When speaking about the Charter, Nandy commented, “Labour has set out plans to tilt the balance of power back towards tenants”. This may appear a positive thing for renters, but landlords may leave the sector as a result of these proposals. This will mean further demand and supply imbalance, driving rents up further for the very same tenants Labour intends to support.
Landlords provide an essential service to the housing market, supporting those unable to purchase a property with safe and reliable homes. We need to see the Government working with landlords to find appropriate solutions for the wider sector as a whole. Only then will we see real improvements for both landlords and tenants.
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